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Investing

PPF Calculator – A tool to calculate your Maturity Returns

PPF Calculator - A tool to calculate your Maturity Returns 1

A PPF calculator is for everyone who is either currently investing in PPFs or planning to do so in years to come. It helps you get out of your indecisiveness about how much investment amount should you begin with and how much returns you shall earn on the invested amount. Furthermore, once you have decided on the investment amount for a regular period, the PPF calculator takes the 15-year period and the current interest rates and presents the maturity value to you.  Let us understand this tool in detail. 

What is a PPF calculator?

An online PPF calculator is a tool that helps you calculate the returns on your PPF investment scheme. Public Provident Fund or PPF helps you mobilise your savings and accumulate wealth for retirement. Currently, you can earn interest at the rate of 7.1% on PPF. The fact that the interest is compounded annually on PPF makes it a lucrative investment option. However, manually calculating interest and returns on PPF can be quite complicated. That’s where an online PPF calculator comes in! 

Let’s dive into how a PPF calculator simplifies the calculations of interest and returns on PPF.

How to use a PPF calculator?

PPF calculators are easy to use. A lot easier than calculating interests and returns manually! You can follow the steps listed below to use the PPF calculator:

Step 1: Enter the yearly amount you want to invest in the public provident fund.

Step 2: Enter the time period for which you want to invest. The PPF calculator automatically takes the 15 years as an investment period since PPF accounts have a lock-in period of 15 years.

Step 3: Enter the current rate of interest applicable to the public provident fund. 

Once you have entered the above details, the Public Provident Fund calculator displays the results, including the total amount you have invested, the total interest you have earned, and the maturity value.

Let us see the formula that is used to calculate this figure.

PPF calculation formula

The interest on public provident funds is compounded annually. The formula used to calculate returns at the time of maturity is given below:

F = P[({(1+i)^n}-1)/i]

Here, the variables represent the following:

F is the maturity value of PPF

I is the rate of interest

P represents the annual instalments

N is the time period in years

The formula given above indicates that – the higher the investment period, the higher will be the returns that you earn.

For example, if you invest Rs. 2,00,000 in your PPF investment account for a period of 15 years at the current interest rate of 7.1%, then the maturity value at the end of the investment period will be Rs. 57,63,698.

What are the benefits of using a PPF calculator?

The points listed below highlight the benefits of using an online PPF calculator:

  • It helps you get a clear idea of how much interest you can earn at the end of the investment period on a given amount of investment.
  • It can also save you from paying hefty amounts of tax.
  • You can have a clear picture of the return amount you will get at the end of the maturity period on a given amount of investment.
  • You can use the PPF calculator as many times as you want until you arrive at the amount you can easily invest regularly. 
  • There’s no scope for manual errors.
  • You can plan your investments better.
  • It gives an estimated amount of total investment you have made in a financial year.

Points to keep in mind while investing in PPF

Listed below are the points you must keep in mind before you start investing in public provident funds:

  • You receive interest on PPF on the lowest balance you have in your PPF account between the 5th day and the end of the month.
  • If you are monthly investing in the PPF account, make sure to invest before the 5th of the month. If you invest after the 5th, it can have a marginal effect on your interests.
  • If you invest before the 5th of each month, you will receive interest for the particular month on that deposit. Otherwise, you will receive interest on the previous balance in your PPF account.
  • If you are making a lump sum payment, make sure you invest before the 5th of April. The interest you earn will be on more balance for April.

FAQs

Can the PPF account be transferred to another bank or branch?

Yes. You have the freedom to transfer your PPF account to another bank branch.

How much interest can PPF accounts earn you?

The Central Government of India determines the rate of interest you will earn on your PPF investments. Currently, the rate of interest on PPF is 7.1% per annum.

When does a PPF investment mature?

The maturity of PPF investments is attained after a lock-in period of 15 years. Once the 15-year period is over, you can withdraw your maturity value.

What are the benefits offered by PPF?

PPF investments guarantee you fixed returns, interest accrual, long-term investment opportunities, and even tax benefits.

What is the minimum lock-in period for PPF?

The minimum lock-in period for PPF investments is 15 years.

What are the tax obligations on PPF?

The PPF investment is tax-free, including the maturity value and interest amount. You don’t have to pay any tax for up to Rs 1.5 lakh annually.

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